This of course is only a cartoon, but a helpful one of one of the proofs the Reverend Thomas Malthus used in his An Essay on Population to show government handouts beget increasing government handouts. Malthus believed, and history thus far vindicates, there were only two possible forms of human community: one in which most are comparatively (or relatively) poor and one in which everyone is absolutely poor. Laws designed under the influence of Benevolence must lead to the latter.

We start at [1] with a small class of Poor who are to be fed, clothed, sheltered, cell-phoned, cable-TVed, and so forth by Government with funds provided by the Taxed. Government extracts wealth, keeps a portion for itself (this step is oft forgotten), and dispenses the rest to the Poor. At this level, the portion the Government keeps is small and the disparity in wealth between Poor and Taxed, while it exists, is small and feels natural: there are rich, mostly middle class, and a few poor.

But since some of the Taxed are not rich, are just above the Poor threshold, and that these At Risk receive some of their wealth from those richer than themselves, who are now surrendering that wealth to Government, and they themselves are unable to afford the tax burdens, some fall into Poverty.

By [2] the class of Poor has grown. This necessitates Government asking the Taxed to “pay their fair share”, i.e. politicians take a larger bite. By this point, the disparity in wealth which once seemed natural and almost invisible has grown noticeable; people wonder how to “correct” it. The Government swells in size and power as more wealth comes under its control: a smaller proportion of taxes are given to the Poor, but this is masked by “borrowing from the future.” Those At Risk struggle harder than before, and more fall into Poverty.

After a while [n], the class of Poor is large and its maintenance becomes painful. The Taxed are excessively burdened; many make devils’ bargains with Government to forestall the inevitable, which has the effect of increasing Government power. The wealth disparity is now glaring, with loud calls for it to be eliminated, by force if necessary. Government, fattened by the many iterations of Taxes, becomes powerful enough to insist on this. It deduces the only way to remove the disparity is by resorting to community of property, where all share equally in the wealth (except the class of necessary leaders). This happy phrase convinces the majority, and away we go into communism once again.

Now this feedback cycle is exactly what happened when England first created its Poor Laws. From Benevolence (emphasis original):

[T]o the immense puzzlement of almost everyone, it was found that the proportion of the population receiving money under the laws (and consequently, of course, the burden of those who paid the tax) always increased. [p. 46]

[For this proof all] that Malthus actually assumed were certain elements of human psychology, as past experience has disclosed them to be. Namely, he assumed an instinct of hunger in all; a sexual instinct in virtually all; a plentiful supply of laziness in the vast majority; and no shortage anywhere of selfishness, stupidity, or short-sightedness. There is, indeed, no rational way to proceed, as Malthus himself says, except on the assumption that human beings will be what past experience has uniformly shown them to have been.

The history of the Twentieth Century is known well enough. But why haven’t we yet (again) “spun down” into the depths? Because new forms of wealth created by advancing technology have propped up the system, enriching many and forestalling outright decline. Stove credits gasoline and electricity. Our age has its own amazements, but just think how long it took the Government to reach in and grab (i.e. “regulate”) the Internet, a process still unfolding. Technology can also hurt: machines are slowly replacing workers at the bottom of the scale, and now some in the middle. It is only a matter of faith, and a hope against the evidence of human history, that “progress” leads only to improvement. Change is not always that which we can believe in.

The poor must not and cannot be ignored. So what is the Solution? Well, the (old) Christian one, which is to say, private, preferably local, charity. Individuals (or groups of them) undirected by Government can choose how much and when to give. They know better than Government just how much charity they can bear and where it is best placed, and when they give they are unlikely to sink into poverty.

This approach strengthens rather than weakens families, and families are a strong defense against poverty. Forcing somebody to “donate” is not charity, a logical fact socialist clergy members should recall. Yet with the disappearance of the family and retreat of religion, all people see is Government.

In other words, itâ€™s not that employers will be offering 2.5 million fewer jobs. Itâ€™s that ObamaCare, by subsidizing low earners and expanding Medicaid for the very poor, will incentivize 2.5 million people not to work.

Related

People rarely think through what is being said by politicians. Women cheered when Obama said something must be done about the wage discrepancy between men and women. Not one understood that he was really saying “men should earn less”, not that women should earn more.

Sheri, this also reminds me of the possibly apocryphal story about the MOOC motivation speaker. In a room of teachers the virtues of the profession are espoused to great applause. “You are grossly underpaid” continues the speaker to even louder applause. “In fact teachers should earn one million dollars a year” adds the speaker and receives a standing ovation that goes on for minutes. After the room quiets down the speaker says “of course, I need only one”.

My favourite Heinlein quote fits here “Throughout history, poverty is the normal condition of man. Advances which permit this norm to be exceeded â€” here and there, now and then â€” are the work of an extremely small minority, frequently despised, often condemned, and almost always opposed by all right-thinking people. Whenever this tiny minority is kept from creating, or (as sometimes happens) is driven out of a society, the people then slip back into abject poverty. This is known as “bad luck.””

I imagine that the middle class is shifting left and it can be demonstrated empirically (even using government data). We are Stage 2 of the cartoon. But progressives will never connect a declining middle class to their policies. They see corporate greed, income inequality and low wages; and sadly they see the “obvious” solutions, tax the profits, tax the rich, and “raise” the wages. Progressives live in a vacuum devoid of unintended consequences; they don’t cause problems, they “fix” them! Just ask my in-laws.

All that philosophizing & such may be ok, might even be right/correct, but it’s a very lengthy slog to sort thru. All one really needs to know on the subject has been succinctly summed up in an allegorical tale by Dr. Seuss (Theodor Seuss Geisel):

IT ALL COMES DOWN TO HOW ONE FRAMES THE TOPIC, and how it is phrased guides the analysis; is the question:

Is it fair that businesses pay women less?,

or,

Why do businesses justify paying a wage premium to hire men?

Same issue, two very different perspectives that, if objectively analyzed, result in very different contributing factors. The former implies covertly or overtly (depending on the form) that there’s some discrimination; the latter that something very different entirely is going on.

Milton Freidman observed this and noted that, for reasons (and there are reasons) businesses are willing to pay more to hire & employ men over women–and taking away a woman’s lower wage advantage actually impacts their ability to get hired (i.e. by forcing “fairness” the effect unfairly discriminates against the very group for which help has been sought…an oft-recurring paradox….). It’s not discrimination against women that dominates this pattern.

There are reasons for this, which anybody inclined can readily find…but NOT if the philosophical approach is used with an uncompromising value that all people, because they are people, “should” be paid the same…

Milton Freidman observed this and noted that, for reasons (and there are reasons) businesses are willing to pay more to hire & employ men over womenâ€“and taking away a womanâ€™s lower wage advantage actually impacts their ability to get hired

A similar argument against minimum wage: raising minimum wage, effectively increasing the cost of unskilled labor, increases the skilled/unskilled ratio. It’s simple economics. Why hire four at $10/hour to do the equivalent as one at $20/hr?

Many also don’t realize that there is a hidden overhead in hiring that effectively doubles the cost. So, in my example above, the employer sees $40/hour to hire one skilled laborer vs. $80/hour for four unskilled.

Some parts of the overhead are employment taxes, social security and benefits. The government raises both the minimum wage and the hidden costs then wonders why the unemployment rate keeps increasing.

Your ‘toon was ok, insofar as it goes….but….as recent reports indicate, a significant oversight: As the tax burden on those that can pay rises, many of those people, sometimes including the entire business, will move to less costly locales/countries [like from New York to Texas…].

Some of those little circles at the upper end (right-most end) of the “taxed” group need to be shown as moving away & out of reach.

The point being that:

– not only does the proportion of moochers* rise;
– the total funds to re-distribute diminishes

Creating the oft-observed phenomena: Capitalism creates an uneven distribution of wealth/happiness while socialism creates a more-or-less even distribution of poverty/misery.

For extra credit illustrate how, as history shows time & again, the proliferation (breeding)of those at the far left in your drawing occurs much faster than those on the right side–further exacerbating the situation over the longer-term (this observation was one underlying factor associated with eugenics; the breeding [not eugenics] aspect is explained very nicely in the intro to “The Revolt Against Civilization,” a 192? book by T. Lothrop Stoddard). Illustrate this with another row(s) of “poor” at “n”.

Related to that is how, under external directive control, the businesses producing goods/services invariably over time become less productive — easily illustrated by circles that decrease in size.

As you’ve portrayed it, the ‘toon leaves the illusion of a zero-sum gain when in reality it is worse; a few minor adjustments can illustrate that.

Malthus works is based on the limited availability of food in a time when famine in Europe where very common. The premise being that helping the poor to survive would only mean that more people would die later.

Of course, since then the food availability as grown exponentially instead of linearly as he predicted. All resources have been found to be much more available than ever thought before. It is more and more likely that gas and oil are not limited in quantity as previously thought.

Unlike food, the creation of wealth has no limit. In fact the creation of wealth is only limited by the fact that the rich have no advantage to see the poor being able to have access to cars, since more cars on the road mean more traffic. Disparities only service the need for the rich to control the poor.

Sylvain: If the poor have no cars, they can’t drive to the mall and buy stuff. Seriously, people on food stamps need food (there are stores that exist on the monthly food stamp traffic), people need clothes from Walmart and the rich would have to go fetch the poor folks they use for field labor and sweat shops if the poor were wtihout cars. Plus, if only the rich have cars, they can’t sell as much oil and get richer, nor can those making movies get people to come into theaters and pay to watch them so the actors can continue to make millions and perhaps the most important, the politicians can’t get votes if people can’t get to the polls and the politicians can’t stay rich and in power. (Did I mention fully one half of the members of the US congress are millionaires? Nanny Bloomberg, former New York mayor, is the 13th wealthiest person in the world. The richest guy owns the phone company in Mexico, so in Mexico, the poor at least have to have phones or said rich dude can’t stay rich.) So there’s actually a lot of value to having fairy wealthy “poor” people from the viewpoint of the rich.

Who actually believes women are paid less than men? Doesn’t everyone with an internet connection know that the “77 cents” claim is the total taxable income reported by each sex divided by the number of filers? No controlling for occupation or time on the job? Intelligent informed people know wage disparity is an economic red herring.

Same bogusness with Reich’s claim of increasing disparity. Undoubtedly he’s referring to a study of after tax income from the CBO study that led support to the “1%” meme popular with the news media, but the study is so narrowly focused as to be meaningless.

The economy runs best when the middle class is strong. A strong middle class means higher tax revenues for the government and a lesser amount paid on welfare.

When the poorest people can afford the same things, though in lesser quality, the rich don’t feel special enough. What fun is there to have a Bugatti Veron a $1 million car if it is only to get stuck in morning commute with people driving cheap ugly car.

The very rich and I mean the top 1% have gotten richer in the last few years. They haven’t suffered a single bit of the last recession. Wall street created the disaster and none of them went to prison for it. CEO send their companies in bankruptcy and they receive millions of $ in bonuses. An employee save a toy from being destructed for his kid and he gets fire and sued by Wal-Mart for stealing garbage.

Why would Wal-Mart raise its employees pay when he can have the government provide food stamps for them.

At some point people are rich enough that all they care about is that no one else, the poor, should prevent them from enjoying their life.

It seems to me that in a free market transaction, both parties go away with more of what they want/need and less of what they are willing to part with. In other words, both parties are satisfied. After all, this is a free market transaction – no coercion.

So, if one party gets rich from free market transactions, can’t we conclude that party is simply very good at satisfying the needs and wants of others?

Should we not thank that person for making our lives better?

True, not all markets are particularly free. So maybe that would be a better place to start ‘fixing things’?

To say that Malthus’s proof was written at a different time and that the poor use the money they received from redistribution on other things than they do not is, of course, not a refutation. Special attention on the “of course.”

Great post. After hearing Malthus demonized for most of my life, I finally got around to reading him. He’s brilliant. The fact that he didn’t foresee the emergence of fossil fuels and the Industrial Revolution doesn’t negate that brilliance.

Sadly, from the Socialist point of view, he’s the worst sort of heretic. And that’s true of socialists on the Right and on the Left.

Wow, Sylvain, you have the worst case of class envy I have seen in a long time (which considering my mother was what I would have considered world champion, that’s saying something). Yes, the economy runs best with a strong middle class, something that cannot occur by taxing the rich, overregulation and too many handouts to the poor. I have no problem with Wall Street–people voluntarily dump money into stocks (which just started declining–wow, who’d have seen that one coming?). Milton gave a good response similar to this.

And as for the guy at Walmart, if you knew anything about retail sales, you would know the guy got fired because he broke a rule he was told about. It’s part of orientation. There is a very good reason for the rule–if employees can “rescue” things from the trash, they tend to do a lot of “rescuing” rather than actual purchasing. The trend then evolves into having friends buy things and return them as “defective” and the employee steals the perfectly good toy out of the trash. Actual employee theft of this kind prompted the rule. It’s not ridiculous–if store employees didn’t steal, the rule would not be necessary.

Also, the rich do not owe the poor anything whatsoever. If they chose to donate to charities, that’s fine. But the poor are not owed anything but a chance. The rich do not block out the poor, unless they directly steal from the poor. This is generally seen in dictatorships more than anything. Bloomberg being rich does not keep “Ted” poor. It’s not a zero sum situation.

Hmm. I was kind of hoping you’d define “statistical evidence”, particularly as it pertained to this post.

But now that you’ve found one article which shows “disparity”, maybe you can find one which shows it doesn’t exist. Aren’t statisticians supposed to consider all evidence on a topic? Or is it just that which confirms her beliefs?

Unlike what you may think I really do not envy the rich, though I’m not kneeing in front of them as if they were gods. There comes a point where for a rich to get richer becomes meaningless. At that point what they want is power, and more power imply the ability to impose your will on the lesser powerful people.

Trickle down economic has been shown not to work, if not downside up. The idea that the rich create jobs is proven false by the simple fact that since 2009 the number of job created is very low while the rich got a lot richer.

How do you explain that in most countries where taxes are higher and welfare more generous you have a biggest part of the population working and a lower or equal unemployment numbers.

Sylvain: Yes, trickle down economics works fine. The Reagan years were some of the most profitable with the highest economic growth and a large increase in median family income ($4000).
I’m still seeing you despising rich people–you continue to call them desiring of power and domineering. Not words you use to describe people you like.
The cost of living in Canada is reported to be 10 to 15% higher than the USA. When we had a Swiss foreign exchange student, she made $14/hr (20 years ago) as a high schooler working in a newspaper office. The jeans she bought for $30 here were $100 a pair at home. Housing was far higher than the US (four to five times higher, if I recall correctly.)
You can make $17 an hour at Walmart in the US–you just have to move to North Dakota to do so. That’s because their economy is booming and they have a labor shortage. So you can make $7/hr more in the US than in Canada, right?
As to why there is less unemployment in Canada, everything I’ve read says your labor pool is shrinking, requiring fewer jobs to sustain full employment. Also, your government does not seem to be as totally idiotic as ours and does not sustain huge populations of lawbreaking “immigrants” on their social roles. I suspect the alleged $13 million here versus the 36,000 over 6 years for Canada (Wiki) makes a big difference.
Unemployment has many causes–including teaching parasites that they can mooch off the government and unemployment and welfare paying more than work. Other countries don’t seem to have these attitudes, even some socialist ones. (Guess it’s like Brave New World, were a new user of “Soma” overdosed, but those growing up with it did not.)
I have read history and I have no desire to head into a socialist/communist direction now just because you think OUR history shows capitalism is bad. Capitalism is what made America great, not socialism and income redistribution. They tried that when the pilgrims landed and nearly starved to death. It was a bad idea. (Why is it a Canadian is so absolutely certain he KNOWS everything about America? Are you omniscient or something? I live here, you don’t. It’s quite annoying. Maybe we in the US should start telling Canadians how to live and educating them on their history, huh?)

“Yes, trickle down economics works fine. The Reagan years were some of the most profitable with the highest economic growth and a large increase in median family income ($4000).”

Oh yes the Reagan years. When the government spending skyrocketed (while having no major recession), a tripling of the debt of $998 billion to $2.9 Trillion, and a growth in the size of government.

The reason people got richer under Reagan is that the government increase its spending. While the reason that the economic growth is so low since 2008 is the decrease in the government spending and the reduction of employee by the millions in the public sector, who all got to receive unemployment benefit that while producing nothing and growing the government spending.

“The cost of living in Canada is reported to be 10 to 15% higher than the USA. When we had a Swiss foreign exchange student, she made $14/hr (20 years ago) as a high schooler working in a newspaper office. The jeans she bought for $30 here were $100 a pair at home. Housing was far higher than the US (four to five times higher, if I recall correctly.)”

When considering the cost of living between Canada and the US you have to consider the dollars exchange rates, the services provided by the government (university cost 2500$ a year in Quebec, no need for medical insurance, 7$/day daycare etc.) and taxes. Overall it is very similar between the 2 countries.

If your way was better than your living condition would be much higher than ours. Never forget that the US as a big advantage with its scale economy provided by a large population.

“You can make $17 an hour at Walmart in the USâ€“you just have to move to North Dakota to do so. Thatâ€™s because their economy is booming and they have a labor shortage. So you can make $7/hr more in the US than in Canada, right?”

Yes and Walmart still make millions in profit. Proof that higher wages doesn’t prevent or reduce investment as the republican claims. If not how come they built a Walmart there. Shouldn’t they have closed it?

A minimum wage of $15 would increase the price of a hamburger at McDonald’s by 10 to 20 cent.

“As to why there is less unemployment in Canada,”

Of course you don’t consider that immigrants pay sales taxes whenever they buy something. And I’n not sure what you think the government pay for them. There are not much benefit they can access.

I have undoubtedly studied US history a lot more than you ever have which is why I think I no more.

It is funny how you forgot that the trust around 1900 were making sure that no one could start a business that could compete with them. The rich want to stay riche and prevent anyone else to have access to the life they have.

A minimum wage of $15 would increase the price of a hamburger at McDonaldâ€™s by 10 to 20 cent.

How did you arrive at that?

If the minimum wage rises so will the cost of everything else. Not only because of increased cost to the employers but from the fact that there would be more money in circulation. It’s inflationary — no additional wealth has been added to the system.

It is funny how you forgot that the trust[s] around 1900 were making sure that no one could start a business that could compete with them.

Makes one wonder how the airline and trucking industries got started and grew to supplant railroads. So much for assuring no competition.

There are not much benefit they can access.

Ha! You don’t know do much about how things work in the States after all.

If you didn’t live in that filthy, stinky cesspool called Canada you might have a better attitude toward life. YOU are responsible for oil shale, the Keystone pipeline and pillaging the planet. How in the —— can you know how much History I have studied? You Canadians are so ungodly arrogant I cannot see how I can possibly have any more conversations with you. You Canadians have a History of being arrogant and condescending. I read Canadian History and I know far more about Canada than you do. I know there’s no point in speaking to someone from a country of arrogant individuals who can’t keep their noses out of other countries businesses. Considering you couldn’t even fight a revolutionary war, well that says it all. Losers all. Thank goodness I wasn’t so unfortunate to be born in such a crappy place to live. Maybe one day you can leave the cesspool and immigrate elsewhere. I feel safe you would never chose to move here, so I won’t ever have to deal with your crappy life attitude.

Sylvain: I must say I may have been a bit harsh. I didn’t realize Canadian unemployment was higher than ours, you have that nasty 10/42 problem and that teens may remain chronically unemployed. I suppose it’s disturbing that maybe the Canadian system is obviously not as perfect as you have indicated. I will try to cut you a wee bit of slack in the future.

The US have been printing money on steroid for the last few years, and were is the inflation.

So then, you agree as well that putting more money into circulation without increasing wealth — precisely what raising the minimum wage does — causes inflation. If the new wage increases are diminished by the inflation they cause then what has been accomplished?

It’s a simple calculation BTW: wealth_total/$total = value($). Even the math challenged should see that the value of the dollar must decrease if $total is raised without and increase in the total wealth because each dollar would then represent a smaller share of the wealth. I guess they don’t teach Economics 101 at socialist schools because socialists don’t need money. If everyone is equally poor, where will the welfare money come from?

The so miscalled “Trickle Down Economics” is more accurately referred to as “The Laffer Curve” and has to do with how much revenue government receives from taxes.

“The curve suggests that, as taxes increase from low levels, tax revenue collected by the government also increases. It also shows that tax rates increasing after a certain point (T*) would cause people not to work as hard or not at all, thereby reducing tax revenue. Eventually, if tax rates reached 100% (the far right of the curve), then all people would choose not to work because everything they earned would go to the government.”
Quote from investopediaDOTcom

It little or nothing to do with how much money government does or does not spend relative to actual tax revenue received.

The far right of the curve is where socialists governments suddenly realize recipients of its largess should do their fair share of the work or they don’t eat. They might even conclude — Oh MY! — that how much they receive should be only in proportion to what the work is worth and the ease in which the job can be filled. They might even award increased amounts to those that excel at their jobs.

Hmmm. Sounds like the way people get paid today with the difference being today you don’t have to worry about being invited to target practice if you disagree.